Victims of homophobic hate crime should be encouraged to report attacks, the Home Office says, as it publishes guidance for reducing such incidents.
Police believe 90% of gay hate crimes are unreported
It wants gay, lesbian, bisexual and transsexual people to feel safer, Home Office minister Tony McNulty said.
Other recommendations include improving the response of the criminal justice system and increasing confidence in the system so that people come forward.
The gay rights group Stonewall and police welcomed the guidance.
The document, entitled Tackling Homophobic Hate Crime, gathers good practice from around England and Wales as examples of reducing homophobic attacks.
Suggestions include raising awareness of the problem, using penalty notices to discourage homophobic crime, and encouraging parents and pupils to report schools which do not take homophobia seriously.
Internet sites should also be set up to encourage people to report hate crimes, the guidelines said, including anonymous reporting to prevent victims being accidentally "outed".
"Any form of crime motivated by prejudice or hate is unacceptable," Mr McNulty said.
He said hate crime could worsen if it went unchallenged, and it was also common for homophobic attackers to be involved in other crimes.
There were over 1,000 homophobic incidents in London in 2005, but police estimate that around 90% of hate crime is not reported.
Hate crime is defined as any criminal incident which is seen by the victim as being motivated by prejudice or hatred of a particular community.
Mr McNulty said police, local authorities and other agencies needed to "understand the impact of homophobic hate crime, its effect on various communities, and to understand that under-reporting isn't in anybody's interest."
One example highlighted was a helpline, called the Blue Phone, set up by Lancashire Police and advertised in lesbian and gay venues and hotels to allow victims and witnesses to report homophobic hate crime.
Lancashire Police assistant chief constable Michael Cunningham welcomed the guidance. "Criminals who are motivated by bigotry and prejudice have to be met head on and victims of prejudice and bigotry have to be supported.
"The implementation of this guidance will assist in bringing offenders to justice and making individuals and communities feel safer."
Stonewall's director of public affairs, Alan Wardle, said: "It's vital that police forces work with their local lesbian and gay communities to tackle homophobic crime and encourage more people to report them."